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Patents and competition law

The Commission has manifested a clear interest on the application of competition law on intellectual property rights. Companies owing patents are no longer free to manage their business at their discretion. For example, in the Margill case, the company concerned was condemned for an abuse of a dominant position following a refusal to license copyright and lists of television programs.

More recently, in its decision of 29 April 2014, the Commission approved the legally binding commitments presented by Samsung Electronics on standard essential patent injunctions.

Standard essential patents are patents essential to implement a specific industry standard. In some sectors, a license to access those patents is essential in order to manufacture products complying with a specific standard. The companies owing those patents detain a significant market power qualifying as a dominant position. For reminder, the European Commission is entitled to condemn companies that abuse their dominant position in case of excessive pricing, predatory pricing, refusal to sell under Article 102 of the Treaty on the functioning of the European Union (hereafter “TFEU”).

Samsung owns a standard essential patent related to mobile telecommunications standard. In April 2011, Samsung initiated injunctions against Apple on the basis of these standard essential patents. In December 2012, the Commission sent Samsung its statement of objections setting out its preliminary concerns that it considered Apple a willing licensee for Samsung standard essential patents and that the seeking of injunctions against Apple in several EU member States might constitute an abuse of a dominant position under Article 102 TFEU.

In the course of the European proceeding, Samsung committed itself not to seek injunctions in Europe on the basis of its standard essential patents for smartphone and tablets against licensees who conclude a specified licensing framework. The framework will provide for a negotiation period of up to 12 months and if no agreement is reached, a third party or an arbitrator will determine the modalities of license. Indeed, any dispute over what are fair, reasonable and non-discriminatory terms for standard essential patents concerned will be assessed by a court or by an arbitrator.

Those commitments provide therefore a ‘safe harbor’ for all potential licensees of Samsung standard essential patents as they will be protected against injunctions by Samsung. Samsung commitments will last for a period of five years.

On 29 April 2014, the Commission adopted another decision on standard essential patents, this time regarding Motorola Mobility.

The case at stake concerns the European Telecommunications Standards Institutes (ETSI) GPAS standard, part of the GSM standard which is an essential standard for mobile and wireless communication. Motorola had sought and enforced an injunction against Apple in Germany on the basis of a standard essential patent which it had committed to license on fair, reasonable and non-discriminatory terms.

The Commission concluded in this case that Motorola was abusing its dominant position by seeking and enforcing this injunction against Apple under Article 102 TFEU. Indeed, Apple wanted a license and was willing to pay the royalties to be set by a German court.

The Commission did not impose a fine on Motorola due to the absence of a well-established European case law on the legality of those injunctions under Article 102 TFEU.

The pressure exerted by the European Commission on the companies owing those standard essential patents is increasing. Of course, the Commission does not generally question the right to use injunctions by patent holders which is essential to protect innovation but it is determined to provide a ‘safe harbor’ for standard implementers who are keen to take license on fair, reasonable and non-discriminatory terms.

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